Real Estate Sales Exam Multiple Choice Questions 4 — Questions and Answers
Question 1: A broker holds a buyer's earnest money deposit in a separate account distinct from the broker's operating funds. This practice is called:
- Conversion
- Commingling
- Reconciliation
- Segregation (trust accounting) (Correct answer)
Correct answer: Segregation (trust accounting)
Proper trust accounting requires brokers to keep client funds in a separate escrow or trust account, preventing commingling with business funds.
Question 2: An owner wants to sell but refuses to list with a broker who brings an offer. Under an open listing, the owner owes a commission only if:
- The broker registers the buyer first
- The broker is the procuring cause of the sale (Correct answer)
- The property sells within 90 days
- The owner fails to find a buyer themselves
Correct answer: The broker is the procuring cause of the sale
Under an open listing, commission is owed only to the broker who is the procuring cause—the one whose efforts directly led to the sale.
Question 3: Which appraisal approach is MOST appropriate for a special-purpose property like a church or school?
- Sales comparison approach
- Income capitalization approach
- Cost approach (Correct answer)
- Gross rent multiplier method
Correct answer: Cost approach
The cost approach—estimating land value plus the depreciated cost to replace improvements—is most reliable for special-purpose properties that rarely sell and produce no income.
Question 4: A contract signed by a minor is generally considered:
- Void and unenforceable by either party
- Voidable at the minor's option (Correct answer)
- Valid and fully binding
- Illegal under federal law
Correct answer: Voidable at the minor's option
Contracts with minors are voidable—the minor may disaffirm the contract, but the adult party is bound unless the minor elects to void it.
Question 5: Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of a loan application?
- RESPA
- ECOA
- TILA/RESPA Integrated Disclosure (TRID) (Correct answer)
- HMDA
Correct answer: TILA/RESPA Integrated Disclosure (TRID)
The TILA-RESPA Integrated Disclosure (TRID) rule, effective 2015, replaced the GFE and TIL disclosure with a Loan Estimate delivered within 3 business days.
Question 6: When a seller accepts a buyer's offer and communicates acceptance to the buyer, what has been created?
- An option contract
- A bilateral executory contract (Correct answer)
- A unilateral executed contract
- A listing agreement
Correct answer: A bilateral executory contract
A purchase agreement is a bilateral contract (both parties promise performance) that is executory (not yet fully performed) at the point of mutual acceptance.
Question 7: The capitalization rate (cap rate) is calculated as:
- Net Operating Income ÷ Gross Rent
- Net Operating Income ÷ Value (Correct answer)
- Gross Income × Vacancy Rate
- Value ÷ Net Operating Income
Correct answer: Net Operating Income ÷ Value
Cap rate = NOI ÷ Property Value; it expresses what percentage return an investor earns on value at current income levels.
Real Estate Sales Exam Multiple Choice Questions 4
A broker holds a buyer's earnest money deposit in a separate account distinct from the broker's operating funds.
This practice is called: